Budget cuts inevitable as Qld's clean-up bill rises

Samantha Hawley
Fri 4 Feb 2011, 9:16 PM AEDT

The Federal Government is preparing to make further budget cuts to pay for its share of the damage bill caused by Cyclone Yasi.

The Prime Minister spent Friday touring Townsville and Innisfail talking to locals, thanking emergency service workers and ensuring the community knew that a 4,000-strong army contingent was at their disposal to help with the clean-up.

It is that clean-up that will largely dominate the return of Federal Parliament next week.

Julia Gillard has made clear the $5.6 billion flood recovery package she announced last week will remain unchanged and she is hoping for cross-bench support to get it passed.

But she says more money will have to be found for the cyclone recovery and it will not come through an increase to the proposed flood levy.

"We will need to find additional resources in the Federal Government's budget to meet the needs of recovering from this cyclone, and so we will have to make some very tough decisions to make money available," she said.

"There will inevitably be some budget cuts that people won't necessarily like the look of, but we will do that in order to make sure we've got the resources available to rebuild in north and far north Queensland.

"We will rebuild from the floods. We have to rebuild here too. We'll do both."

The damage bill from Cyclone Yasi is not yet known, but Ms Gillard points to the $500 million footed by the Federal Government after Cyclone Larry in 2006.

But Opposition Leader Tony Abbott says the Government needs to make more savings in the budget to cover the cost of the floods and Cyclone Yasi.

"Now the fact the Prime Minister has said she'll be looking for additional savings suggests to me there is fat in the budget," he said.

"I've made a very genuine offer to the Prime Minister to sit down in the national interest, in a spirit of national unity, to look at what's in the budget and to try to find the savings that would save Australia from an unnecessary new tax."

The Coalition will oppose the flood levy when it is introduced into Parliament next week.

Government minister and Leader of the House Anthony Albanese says he is still waiting to hear what budget cuts Mr Abbott proposes.

"Eight days ago Tony Abbott, in justifying his opposition to the flood levy, said that he would outline cuts he would make to the budget within days," he said.

"It is now eight days later and we've heard nothing from Tony Abbott about what cuts he would make rather than have support for the flood levy."

Mr Abbott and members of his shadow cabinet agreed on a list of budget cuts at a meeting in Sydney today.